All about real estate investments in Turkey

The real estate market in Turkey has been growing at an impressive rate during the last several years. The TurkStat Institute reports that the real estate sector is responsible for up to 18% of the total GDP. The growth is fueled by the increasing demand for rental properties and permanent dwellings from tourists and expatriates, intensifying economic development, and government incentives.

Several factors play a key role in the improvement of the sector in Turkey:

• Favorable demographics. Despite the rapid urbanization, there are still a lot of people who prefer living in rural areas, providing a stronger birth rate compared to many developed European and Asian countries. Immigration and tourism also play a huge role. Experts expect the urban population to continue growing creating a strong demand for residential properties.

• Affordable pricing. The cost of living is on par with real estate prices which are lower compared to other developed countries. Thanks to support from the government and flexible pricing in the sector, Turkey managed to attract foreign investors and home buyers seeking permanent residency in a country with excellent public infrastructure and good weather.

• Tourism is an important factor. One of the most important drivers of the local real estate market is tourism with over 35 million international tourists arriving annually before the pandemic (the numbers are recovering quickly). Rental yields in the country are quite high with some markets like Alanya being especially lucrative for landlords.

Real estate investment efforts from international buyers are fueled by several drivers:

• Good location. Turkey is a logistical powerhouse connecting Europe, Asia, and the Middle East as well as some parts of the MENA region. Turkey is surrounded by four seas: the Black Sea, the Sea of Marmara, the Aegean Sea, and the Mediterranean Sea. Resorts can mainly be found on the Aegean and Mediterranean coasts. However, between the Black Sea and the Sea of Marmara lies Istanbul.

• Programs for foreigners. In Turkey there is a wide range of programs for foreigners, including in the field of education.

• Diverse economy. The country has several well-performing sectors such as manufacturing, service, tourism, and agriculture producing over $800 billion worth of GDP.

• Robust labor force. Experts believe that Turkey’s key advantage is its youthful (32 years old on average), well-educated workforce of locals, expatriates, and digital nomads.

• Long-lasting infrastructure. Large projects undertaken by Turkey aim to produce massive economic outputs in years to come. Better roads, markets, healthcare, education, and communication networks make the country quite robust in terms of infrastructural and logistical soundness.

• Excellent investment opportunities. The country sticks to a very liberal style of regulating foreign capital. Real estate investments in Turkey comprise a significant portion of total cash inflow, but streamlined bureaucratic procedures and strong protection of property ownership allowed many investors to redirect capital to many other sectors like energy, manufacturing, technology, finance, and tourism.

• Growing consumer market. The success of online retail platforms like Hepsiburada and eBay in Turkey makes it clear that the consumer market is improving and has room to grow. It means that the near future holds a lot of promises to all foreign investors betting on the appreciation of assets and properties situated in the country.

Economic overview of Turkey

It is true that real estate investments represent a significant portion of the total country’s GDP. Some might say that it is THE driving factor of the economy, a claim which is supported by statistics. However, despite some political and economic tensions, the economy of the country seems to be robust and stable.

Even currency inflation may be beneficial to foreign investors bringing much stronger US dollars and euros to the economy, which it desperately needs to sustain the current rate of growth and expansion.

Here are some factors to consider when considering real estate investments in Turkey:

• It is a great time to start. The real estate consultation giant Knight Frank reports that Turkish prices increased by 8.2% in 2021 strongly outpacing the global average. However, prices remain competitive making it a good time to purchase property that will undoubtedly appreciate over time.

• Growing international demand. Real estate investments in Turkey account for over $129 billion of direct investments during the decade between 2013 and 2023. Over 45 thousand properties are sold to foreigners annually and the number keeps increasing indicating a strong demand and the attractiveness of the country to international investors.

• The tourism and hospitality sector attracts over 35 million tourists annually and creates a competitive environment in the real estate sector allowing for rental yields of up to 8%. With favorable government policies providing strong incentives to foreigners, investing in real estate is a great way of efficiently allocating capital. The rental market CAGR has increased by at least 5.4% during the period from 2021 to 2024.

Legal framework for real estate investment

Turkey is known for its liberal approach to attracting direct foreign investment. The government makes sure that capital holders feel safe buying properties in developed areas.

Below are some important legal regulations affecting real estate investments in Turkey:

The regulation of the real estate market is done by dedicated agencies like the Ministry of Environment and Urban Planning, Capital Markets Board, and the Directorate General of Land Registry and Cadastre. These governmental bodies ensure that participants of the market work in an environment of transparency and can rely on investor protection.

Tapu Law. The Title Deed is an important regulatory instrument allowing buyers to secure absolute ownership rights that cannot be challenged by any court or governmental body. Although foreigners have to jump through several more hoops to obtain tapu it is still a straightforward process easily navigated by professionals at STAY PROPERTY.

Urban Transformation Law is a part of massive zoning and planning regulations that ensure harmonic development of available land plots without compromising projects and their long-term future. Note that one should consider these regulations when thinking about real estate investments in Turkey as Foreign Direct Investment Law dictates that foreigners must abide by the same rules as locals.

Taxation laws should be carefully examined before purchasing property in Turkey since they affect transactions, ownership, and rental income. VAT, Tapu fees, and transfer and property taxes (emlak vergisi) all contribute to the final amount which can be significant.

Popular real estate investment destinations and types

Foreign investors often look at several main destinations for capital allocation:

• Istanbul is the most populous European city with a thriving economic ecosystem and great connections within the national and global economy.

• Antalya and Alanya are both popular resorts that have growing tourism and hospitality sectors providing ample opportunities for profitable real estate investment.

• Bodrum acts as a gateway to many resorts, beaches, and rural areas making it an important economic and logistical hub with a thriving tourism sector.

Targets for direct investments are diverse and offer different perks to investors and future real estate owners:

• Commercial real estate is represented by a rich variety of hotels, malls, retail spots, offices, and industrial areas suitable for immediate permissible use.

• Trendy projects like co-working environments with shared amenities and mixed-use developments are capable of producing different economic outputs.

• Residential complexes in resort towns, such as in Alanya, with a hotel concept. This means they have pools, a water park, a fitness center, children's playgrounds and play areas, a hammam, a sauna, a spa area, and video surveillance.

It is important to work with an experienced real estate company to ensure that your investments are safe. If you are interested in shopping for property in Turkey, give STAY PROPERTY a call and expect exhaustive consultations and meaningful assistance. The real estate agency STAY PROPERTY offers interest-free installment plans and assists with mortgage arrangements. STAY PROPERTY will help you obtain Turkish citizenship and provides high-level after-sales service.